Why Hi-Tech Startups Should Care About Culture

It's a no-brainer that CEOs have to attend to company culture, but the CEO in high-tech has a set of additional cultural burdens.

A company’s culture is an essential component for its success. Defining company culture is difficult. Let’s settle for a simple definition of the shared values of the organization and look at how those values are communicated, implemented, and modified by the team.

The benefits of a strong culture are that the whole team works well together, and new employees can easily integrate, given the clear behavior patterns set by the team. In other words, out with the dreaded corporate politics. Conversely, in case of a weak culture, management is required to put in place a more rigid infrastructure to monitor and correct problems in the organization. There is an obvious cost in the form of bureaucracy, loss of productivity, and employee morale.

In other words, companies with strong, positive cultures are a lot more fun because employees have a lot more freedom to operate.
The internal aspects of the company culture are most often discussed, but company culture also affects the relationship with customers, partners, and other stakeholders.

High-tech culture club
One of the key challenges with company culture that I have encountered in high-tech startups is the integration of employees from different origins. Today, even small startups have employees located across the world. Most of them are not native English speakers. They come from very different backgrounds and have to communicate through email, a distorting communication medium.

Compound this with the fact that team members were recruited from the elite formed in the best schools, meaning that these team members have well-formed opinions. The opportunity for miscommunication is real. The solution? Team members need to meet face-to-face and get to know each other. It can be difficult to organize company-wide meetings in startups where the budget is tight, but the value of these get-togethers cannot be ignored.

A company culture will change over time. This starts with the simple reality that employees will leave to be replaced by new ones who have different behaviors. Every one of those hires influences the company culture. Of course, in a strong positive company culture, the group will naturally filter out negative influences. Also, when the company grows, changes are unavoidable. Some changes are viewed as constraining by employees used to the looser startup culture. For example, companies typically decide to impose name badges when they reach 100 to 200 employees. I have lived through this stage three times and every time a few employees resisted this perceived loss of freedom.

Culture change
Another topic that is often discussed is the ability of the management team to set the company culture. I am a big believer that this is an important part of the CEO’s job. Of course, setting or changing the company culture has to be done with clear objectives in mind.

What works best for the organization, taking into account the industry, company size, etc.? Past experiences are important here. What worked for the key team members in the past is worth replicating.
The CEO and his or her management team control a lot of levers that drive the company culture. They start, of course, by setting the right example. But there are many more pragmatic switches that can be activated.

Case two: customer focusThe customer urgently needs a new feature in the software. Possible answers can range from “it is not planned,” to "we'll add it to the next release," or "this is now the top priority of my development team."

Case three: employee compensationIs the focus on individual or company performance for discretionary income, such as commissions and bonuses? Another interesting quandary can be the big or small differences between the compensation of top performers and average performers in similar functions. These variations can be viewed as either the cause of conflict or a deserved reward.

A parting comment
Maybe the true measure of the company culture can be found by listening to what’s being discussed around the espresso machine. A CEO who ignores the company’s culture does so at his or her peril.

—Michel Courtoy is a former design engineer and EDA executive who sits on the board of directors at Breker Verification Systems.